As the slump deepens, so does the disarray in the governing class. If proof were needed that responsibility for this crisis goes a great deal further than a tumbril-ful of greedy bankers, yesterday's resignation of Sir James Crosby from the Financial Services Authority offered plenty. Naturally, the former HBOS chief executive and Gordon Brown adviser on mortgage lending insisted there was "no substance" to allegations made in parliament that he fired an executive at HBOS three years ago for warning that the bank was recklessly taking on too much risk.

More bafflingly, Crosby claimed the representations made by the defenestrated whistleblower, Paul Moore, had been found to have "no merit" - when the subsequent collapse of HBOS has surely shown they were entirely correct. But this was the man, knighted in 2006 for his "contribution to financial services", who was singled out by the prime minister to be number two at the bankers' club that is Britain's financial regulator. As yesterday's official figures showed unemployment rising at twice the rate of the rest of Europe and the governor of the bank of England acknowledging the country is now in "deep recession", it's clear that the net of guilt is going to have to be thrown a good deal wider than the queue of penitent bankers paraded before the House of Commons this week.

Of course the "Scumbag millionaires", as the Sun called them, are rightly the target of public rage: their continued bonus-mongering a scandal, their rehearsed humility palpably insincere, their attempt to apologise for the "turn of events", rather than their own devastating actions, truly nauseating. But, as the disgraced former RBS chief executive Sir Fred Goodwin told MPs: "It's too simple to blame it all on me." To make a few banking has-beens the fall guys is to let off the hook a political and corporate elite that underwrote everything such people did for a generation.

Who befriended Lord Stevenson, ex-chairman of HBOS, and put him in charge of House of Lords vetting? Tony Blair. Who embraced Goodwin as a regular visitor to 11 Downing Street, appointing him to this taskforce and that advisory council? It was the same Gordon Brown who hailed the City's "new golden age" just as it was tipping over the precipice of a classic speculative crash.

And who unleashed the financial free-for-all that created the conditions for the crash - and who then warned against any move to bring the City to heel last year? The Conservative government and its would-be successors, David Cameron and George Osborne, cheered on by most of the media, Rupert Murdoch's Sun included. The same goes for the cult of deregulated markets, privatisation, pocket-stuffing bonus culture and corporate-controlled globalisation now intensifying the real-world impact of the financial implosion.

Blaming the crisis on individual greed or ethical lapses also fails to address its systemic character. No surprise, then, that it's a favourite theme of market fundamentalists who find it impossible to accept that capitalism's regular breakdowns might be in any way built into its DNA. As Daniel Henninger, deputy editor of the Wall Street Journal, recently declared, nothing that has occurred "discredits the system of free-market capitalism ... the system has been badly used - by mere people".

The current crisis is the product of a particular form of financialised capitalism. And even if Henninger's touching faith may not extend far beyond the ranks of the true believers, a generation of politicians shaped by neoliberal supremacy is still hamstrung in taking the steps necessary to offset the worst effects of the collapse. In Britain, that includes the government's dogged attempt to try any number of ineffective indirect measures to get bank credit flowing again in preference to the increasingly urgent need to nationalise high street banks - or even to using its existing leverage to remove the last snouts from the bonus and executive pay trough.

The same pattern is being repeated on a far bigger scale in the US, where Barack Obama has had to scale back a two-year $800bn stimulus plan that was in any case a long way from filling the gap in demand triggered by the crash. More alarming still is treasury secretary Tim Geithner's $2 trillion new damp-squib bank cash transfusion, which aims to create a new private-public "bad bank" for toxic debt, relaunch the failed securitised consumer loans market, and recapitalise banks that are already supposed to have been rescued by George Bush's no-strings bail-out of last autumn.

The baleful influence of Wall Street and sponsors of the Clinton administration's disastrous financial deregulation, including Obama's national economic adviser Larry Summers, is clear enough. So is the likelihood that such a hotchpotch of half-baked measures aimed at coaxing private institutions to do what they have no interest in doing will undermine the impact of the spending boost. A public takeover, on the other hand, could reopen credit lines and overcome many of the problems connected with isolating bad debts.

But if Brown and Alistair Darling have problems facing up to the necessity of public ownership, in the US it can be painted as dangerously un-American, and progressive US economists such as Joseph Stiglitz and Paul Krugman have to fall back on euphemisms. That is changing fast under the pressure of events: this week, the cover of US magazine Newsweek declared "We are all socialists now" - by which it seemed to mean big government, European-style.

The resistance to essential bank takeovers, as well as the rubbishing of public intervention in the domestic economy as "protectionism", is partly the fruit of decades of ideological drilling, but also a fear of political accountability in areas long excluded from the reach of democracy. Even if bank nationalisation offers no challenge to capitalism, it is an acknowledgement of a huge failure of private ownership.

In any case, that resistance is out of time. The schools secretary Ed Balls predicted at the weekend that this economic crisis would "define our politics" and "change the political landscape" for many years to come. He's clearly right. Booing Davos Man off the stage in the Commons this week was a healthy first step, but the appetite for more far-reaching change will certainly grow. Either politicians grasp that, or they are likely to be swept away themselves.